Sunnova upsizes convertible notes; Halozyme jumps on trading debut; FuboTV improves

By Abigail W. Adams

Portland, Me., Aug. 16 – New convertible notes remained in focus on Tuesday with one offering slated to price after the market close and one new deal making its aftermarket debut.

Sunnova Energy International Inc. plans to price an offering of six-year convertible notes after the market close on Tuesday.

The deal played to heavy demand during bookbuilding with the offering upsizing and talk narrowing to the tight end of the range.

Meanwhile, Halozyme Therapeutics Inc. priced an upsized $625 million of six-year convertible notes after the market close on Monday.

The deal dominated activity in the secondary space with the notes jumping on debut.

Halozyme’s 0.25% convertible notes due 2027 were also active with the notes improved on the heels of the new offering.

The new paper hit the secondary space on another choppy day for equity markets with indexes again wavering between gains and losses before closing the day mixed.

The Dow Jones industrial average closed Tuesday up 240 points, or 0.71%, the S&P 500 index closed up 0.19%, the Nasdaq Composite index closed down 0.19% and the Russell 2000 index closed down 0.04%.

There was $665 million on the tape about one hour before the market close although Halozyme’s convertible notes accounted for about one-third of the total reported volume in the space.

However, fuboTV’s 3.25% convertible notes due 2026 saw renewed attention with the distressed notes improving as stock spiked on the company’s investor’s day.

Sunnova upsizes

Sunnova Energy’s offering of six-year convertible notes played to heavy demand during bookbuilding with the offering upsizing to $500 million from $425 million and talk narrowing.

Revised talk tightened to a coupon of 2.375% to 2.625% and an initial conversion premium of 27.5% to 30% from the initial talk for a coupon of 2.375% to 2.875% and an initial conversion premium of 25% to 30%.

The deal was heard to be in the market with assumptions for a credit spread of 650 basis points over Libor and a 45% vol.

Using those assumptions, the deal looked 3.4 points cheap at the midpoint of tightened talk assuming a normal borrow, a source said.

Short interest in the Houston-based solar and energy storage service provider is extremely high at 18.5%.

However, the borrow appeared to be fine, another source said.

There was debate over the credit spread of 650 bps, which some saw as wide and others saw as tight.

The company’s outstanding 5.875% senior green notes due 2026 currently trade with a 422 bps spread over the five-year Treasury note, a product of the massive tightening in credit markets over the past three weeks.

While some sources saw the 650 bps as wide given its straight debt, others saw the assumption as in line given the additional duration risk and the convertible notes’ lower place in the capital structure.

Halozyme jumps on debut

Halozyme Therapeutics priced an upsized $625 million of six-year convertible notes after the market close on Monday at par with a coupon of 1% and an initial conversion premium of 30%.

Pricing came at the rich end of talk for a coupon of 1% to 1.5% and the midpoint of talk for an initial conversion premium of 27.5% to 32.5%.

The greenshoe was also upsized to $95 million.

The initial size of the offering was $500 million with a greenshoe of $75 million.

The new paper played to heavy demand during bookbuilding with a portion of proceeds used to refinance its 1.25% convertible notes due 2024.

The 1.25% convertible notes were exchanged for $77.6 million in cash and 1.51 million shares in privately negotiated transactions.

The deal also came as a happy meal with $90 million of net proceeds to be used to repurchase 2.09 million shares of common stock concurrently with the closing of the offering.

The demand for the new paper followed it into the secondary space where it jumped on an outright and dollar-neutral basis.

The 1% notes were changing hands at 102.375 versus a stock price of $43.53 early in the session.

They continued to gain as stock improved alongside equity markets as the session progressed.

The notes were seen at 104.5 versus a stock price of $45.19 in the late afternoon.

They expanded 2.5 points to 2.75 points dollar-neutral, sources said.

The notes dominated activity in the secondary space with $189 million in reported volume about one hour before the market close.

Halozyme’s 0.25% convertible notes due 2027 were also active with the notes improving on the heels of the new offering.

The 0.25% notes gained 2.5 points outright.

They were trading at 91.25 versus a stock price of $45.27 in the late afternoon.

The notes gained 1 point dollar-neutral, a source said.

Halozyme’s stock traded to a low of $42.95 and a high of $45.76 before closing the day at $44.48, an increase of 3.23%.

fuboTV gains

fuboTV’s 3.25% convertible notes due 2026 improved in active trading on Tuesday with stock “going crazy,” a source said.

The deeply distressed 3.25% convertible notes gained about 5 points outright.

They traded up to 45.75 in the late afternoon, according to a market source.

The yield on the notes was about 29%.

There was $9 million in reported volume.

The majority of activity in the name was outright; however, a small amount was trading on swap, a source said.

fuboTV’s stock traded to a low of $4.32 and a high of $8.14 before closing the day at $6.35, an increase of 44.81%.

Stock spiked as the company held an investor’s day.

However, stock has risen 152% over the past month as meme stocks and retail trader induced short-squeezes have once again come into play.

While stock has surged in recent weeks, the convertible notes remain deeply distressed with a conversion premium of over 800%.

Mentioned in this article:

fuboTV NYSE: FUBO

Halozyme Therapeutics Inc. Nasdaq: HALO

Sunnova Energy International Inc. NYSE: NOVA

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